Archive for July, 2011

CENTRAL FALLS, R.I. — The retirees came from near and far, gathering in a muggy auditorium here to listen to an urgent pitch: give back a big chunk of your pension or risk losing it all.

This city of 19,000 is broke and headed for bankruptcy, partly because it has promised retired police and firefighters millions of dollars in pensions and benefits that it cannot begin to afford.

And so Robert G. Flanders Jr., a state-appointed receiver who is trying to right the city’s finances, found himself on the stage at Central Falls High School on Tuesday, asking retirees to help solve “a horrible dilemma” by giving up a significant part of what they had always assumed was untouchable income.

“No one blames any of you for this situation,” Mr. Flanders told the retirees, many of whom appeared well into their 70s and 80s. “We understand, believe me, that we are asking for great unanticipated sacrifices. But there is simply no money in the city to continue on the current path.”

By way of warning, he pointed to the example of Prichard, Ala., which stopped paying retirees in 2009 after its pension fund ran out of money.

Under Mr. Flanders’s plan, which he calls The Big Ask, some retirees would lose almost half their benefits, with the goal of cutting a total $2.5 million a year in retiree costs. Someone who retired at 55 after 30 years on the job, for example, would see his pension shrink to $21,217 a year, from $40,037.

No recipients, including widows of retirees, would see their pensions cut by more than half or to less than $10,000 a year, said Mr. Flanders, a retired Rhode Island Supreme Court justice. The 141 retirees will have to vote on the proposal in the coming weeks, and he pressed them to accept it, saying bankruptcy could lead to “even more drastic” changes. The city’s annual budget is about $17 million, and it has an operating deficit of about $5 million.

“I would advise you that a haircut still looks a lot better than a beheading,” Mr. Flanders told reporters after the meeting. “I hope upon reflection they will at least consider the idea that it’s better to get something than potentially nothing.”

But the initial response suggested it would be no easy sell. Why should they be punished for the city’s financial missteps over the years, some retirees asked? Why not keep raising taxes instead?

“Where is the fairness?” said Michael Long, a retired police sergeant who lives in Attleboro, Mass. Mr. Long, 54, said he would rather “take our chances” and let the city file for bankruptcy, drawing hearty applause from the crowd.

“We put our money in,” said Walter Trembley, a 74-year-old retired police officer who drove to the meeting from his home in Lake Worth, Fla. “And the city, through their callousness and everything else, just blew it.”

Mr. Flanders said taxpayers in the city of just over one square mile, including many poor immigrant families, had already been hit too hard. Property taxes rose by 20 percent last year and by 4.5 percent this year, he said. Mr. Flanders closed the city’s library and community center last month and said he had to preserve the basic city services that remained.

Jenny Galligan, whose husband, a former Central Falls police chief, died last year, said that she was living on his pension of about $24,000 a year and that it would shrink to about $16,000 under the plan.

“That’s all I got,” said Mrs. Galligan, 78, of Pawtucket. “I’m just about making ends meet, and now they want to do this?”

Like many other municipal workers around the country, public safety employees in Central Falls do not pay into Social Security and thus get no Social Security benefits after retirement, a point that several complained about at the meeting.

Although many of the retirees were elderly, some in the crowd were still in their 40s and 50s, people who were allowed to retire early under the city’s rules.

Under Mr. Flanders’ plan, firefighters and police officers would generally have to work until age 60. The current system allows them to retire after 20 years of service, no matter how old they are. The plan would allow early retirements, but with smaller pensions.

Bruce Ogni, a former police captain who retired six years ago on a disability pension after being injured on the job, said he “might as well go on public assistance” if the plan was approved.

“It’s just insane that this is happening in America,” said Mr. Ogni, 48. “How do I tell my children now that you get rewarded for doing the right thing? I did all the right things, and look how I’m getting rewarded.”

State Senator Elizabeth A. Crowley, a Democrat who grew up in Central Falls, had tears in her eyes as she greeted retirees she had not seen in years and listened to them vent about their predicament.

“These are the faces I knew growing up,” Ms. Crowley said. “I’m hoping we don’t have anybody here who has a heart condition because what they’re hearing is not pretty.”